Early in 2013, Brandon Transport discovered that a five-year insurance premium payment of $250,000 at the beginning of 2010 was debited to insurance expense. The correcting entry would include:

The correcting entry would involve a debit to an insurance prepaid account for $250,000 and a credit to insurance expense for the same amount. This is to correct the error in recording the payment as an expense immediately, instead of deferring it to be expensed over the five year policy period.